The Euro to Dollar exchange rate continued to rise fell while high-yielding currencies such as the Australian and New Zealand Dollars also gained during trading yesterday on expectations the U.S. Federal Reserve would opt to pump more money into the banking system.

But the Dollar also reached an eight-month high against the Yen on bets the Bank of Japan will implement more aggressive monetary easing after an election on Sunday, a victory for the Liberal Democratic Party is expected.

The Federal Reserve is expected to announce a fresh round of Treasury bond purchases later on Wednesday, with many economists forecasting it will opt for monthly purchases of $45 billion.

The more Dollars the Federal Reserve pumps into the market, the weaker the Dollar should get, and the higher the yield advantage and liquidity in higher yielding currencies. The main currencies to benefit should be the Australian and New Zealand Dollars.

The U.S. dollar, Euro, Yen and Pound are the world's four most liquid currencies - all have near zero interest rates now but the Australian Dollar doesn’t, this makes the carry trade attractive between these currencies and hence the rate of exchange should continue to drop versus the Ozzy Dollar.

World equities and commodities have also edged higher as expectations of further monetary stimulus from the U.S. Federal Reserve pushes market participants into solid assets and equities, U.S. stock index futures suggested Wall Street was also likely to see a sixth day of gains as investors anticipated the Fed's decision.

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